Australia’s PMI manufacturing index is scheduled for release Sunday evening and while stronger Chinese growth suggests that Australian manufacturing conditions may have improved, businesses remain pessimistic and for this reason we feel that the data is best traded reactively. If the PMI index exceeds 45, we expect the AUD/USD to rally in relief. If the index drops below 40, we expect AUD/USD to weaken. REACTIVE TRADE

We have strong reasons to believe that U.K. manufacturing activity improved in the month of August because a similar survey conducted by the Confederation of British Industry increased. As such we feel this data can be traded proactively or reactively. For those who choose to wait, if the PMI index exceeds 56, the GBP/USD can be bought for a quick move higher. If the UK PMI index drops below 52, the GBP/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS
5500 tested again
5400 key support
5600 caps the upside for now

Cable continues to test 5500 support, but the true deeper support is at the 5400 level from which the current rally broke out. 5600 caps while 5700 is very strong double top resistance.

The RBA is not expected to alter interest rates tonight but the tone of the central bank could have a large impact on how the AUD/USD trades. Given the recent trend of Australian data, we feel that the RBA will be dovish and leave the door open to additional easing. However with central bank decisions, it is always best to wait for the data to be released before taking a trade. If the RBA shifts its tone from dovish to neutral, the AUD/USD can be bought for a further squeeze higher. If the RBA ignores recent improvements and the decline in the AUD and remains dovish, the AUD/USD can be sold for a resumption of the downtrend. REACTIVE TRADE

We have good reasons to believe that Swiss GDP growth accelerated in the second quarter. The two main components of GDP are retail sales and trade – both of which improved between April and June. We feel that the data can be traded proactively or reactively. For those who choose to wait, if GDP is flat or declines, EUR/CHF can be bought for a move higher. If GDP growth exceeds 0.7%, representing acceleration in Swiss growth, EUR/CHF can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS
Back to 2300
2350 caps
Break of 2300 opens test of 2250

EUR/CHF is back to the 2300 level as the run to 2350 fails again. A break of 2300 opens a test of much more important support at 2250 as the pair continues to remain rangebound.

The national ISM manufacturing index can be an important release for the U.S. dollar. We typically like to trade this report proactively but this month, the lower Empire and Philly Fed survey was offset by the large increase in Chicago PMI, making the data difficult to call. Therefore ISM should be traded reactively. If the index exceeds 57, USD/JPY can be bought for a move higher. If it drops below 53, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS
98.50 fails to hold again
98.00 still holds
Break key to test of 99.00

USD/JPY continues to consolidate in a very tight range as 98.50 still fails to hold, but 98.00 remains support. The pair must hold the 98.50 level on closing basis which is key to making a run towards the retest of 99.00.